Kingsland Road is a tatty strip of kebab shops and snooker halls running along the western edge of Hackney. One of the last ungentrified frontiers left in east London, it's also home to the Geffrye Museum - a genteel collection of middle-class living rooms in London, dating from 1600 to 2000, each one a perfect recreation of the "tastes and values of people belonging to the middle ranks of urban society".

The very last living room - a cosmopolitan cliche of exposed brickwork and stainless steel - is instantly recognisable as a modern warehouse loft conversion. The surprise, though, is how familiar all the other rooms from earlier centuries look as well. As you admire the tastefully muted Georgian panelling, or overbearingly sumptuous Victorian soft furnishing, you know you're in a museum - but you could also be standing in almost any middle-class friend's front room. Fashions may have changed over the years, but every look remains a perfectly acceptable style option today. The primary function of contemporary middle-class interior design, you see, is not to advertise one's aesthetic flair, but one's class.

A mile or so north, just off the same long stretch of road, you find a branch of Argos. Argos always used to sell unambiguously functional household goods to people on a budget - and its target market has not changed. In the queue snaking back to the door, nobody looks affluent or professional or white. But since recruiting Richard E Grant to restyle the brand ironically as "Ar-goose", Argos now sells discount imitations of almost every middle-class exhibit you can see on display in the Geffrye down the road. In the mega-discount retail giant Matalan a couple of streets away, faux-vintage chandeliers are going even cheaper still - just £20 - while flock velveteen tasselled cushions suggestive of pre- revolutionary imperial France are doing a brisk trade at £6 a pop.

Back in 1937, George Orwell predicted that the middle class was doomed to "sink without further struggles into the working class". Thirty years later, from the other end of the political spectrum, the Sunday Telegraph City editor Patrick Hutber published The Decline and Fall of The Middle Class, in which he warned: "It is a time of crisis for the middle classes, who are subjected to unprecedented pressures and unprecedented denigration." In the 70s, Lawrence James notes in The Middle Class: A History, more than three quarters of British people believed class conflict was inevitable, and half even thought it desirable.

The results of our survey demonstrate that reports of the middle class's death were greatly exaggerated. The majority of us continue to describe ourselves as working class - a proportion that rises steadily the farther north in England you travel. But interestingly, the overall percentage who identify themselves as middle class remains unaltered from a decade ago - and yet, the paradox is that the middle class's cultural influence - in particular on aesthetic lifestyle tastes - has never been greater than today. When Tony Blair claimed in 1999 that we were "all middle class now" he might have been articulating his ambition more than our reality. Yet as the English gather in their gastropubs later today to drink imported lager and watch the rugby, the country can never have looked less working class.

Gentrification of the popular aesthetic began as far back the 80s. My favourite shop used to be Chelsea Girl, an emporium of teen fashion trash staffed by girls with peroxide perms, fringes they could chew, and half a dozen studs in each ear. Then, out of the blue, one weekend Chelsea Girl was transformed into River Island - redesigned as a bluesy homage to retro soulful chic, with vintage luggage trunks everywhere and the shop assistants suddenly reinvented as gypsy-poets, in flowing cotton boho skirts and billowy strapless tops.

Twenty years later, the same aspirational trend was behind the long queues that began forming outside a shoe shop in Covent Garden in the summer of 2003. Soon the shop had to hire bouncers, and operate a one-in one-out policy, like a nightclub, as its online mail order service collapsed under pressure of demand. Birkenstock sandals had been on sale since 1977, but their appeal had hitherto been so confined to leftfield middle-class liberals that when Gwyneth Paltrow was spotted wearing a pair in 2002, it was taken as evidence of depression. Yet less than 12 months later, sales of Birkenstocks were up by 500%, and to this day every high-street chain is still hawking its own imitation, hoping to mop up the gap between supply and demand.

To be a middle-class student just 20 years ago carried such a social stigma that many graduates in their 40s recall faking a proletarian accent for their entire university education. Nowadays, however, a popular student party theme is dressing up as "chavs" - working-class types with a taste for Burberry, but not the budget, whose ideas above their station provide material for half the jokes on campus today. Subscribers to Popbitch, a gossip website favoured by media insiders, had great fun a year or two ago popularising the terms "pramface" and "Croydon face lift" - nicknames for young mums on council estates, and chav girls with pony tails pulled too high. It's a measure of how far assumptions have shifted that when Julie Burchill accused the Popbitch set of snobbery, they seemed genuinely taken aback.

The growing confidence of middle-class identity can be detected in its evolving treatment on television. Hit shows in the 70s used to ridicule middle-class pretensions - not just in Keeping Up Appearances or The Good Life, but in most factual television too. Paul Watson's famous documentary, The Dinner Party, was a pitiless exposé of privileged arrogance. But TV's victims today tend more often to be the poor and disadvantaged, shamed on You Are What You Eat for being fat, taunted as social inadequates by Jeremy Kyle, or cast - like Wife Swap's feckless Lizzie Barnsley - as a public moral disgrace.

Yet the paradox revealed by our survey is that the younger the respondent, the less likely they are to consider themselves middle class. Half of all 55- to 64-year-olds claim to be middle class, with just less than half - 48% - identifying as working class. With each drop in age, however, the middle class shrinks, while the working class steadily grows. When you get down to 25- to 34-year-olds - the generation that wears Birkenstocks, drinks lattes and cooks fresh linguini - only just over a third consider themselves middle class, compared with 56% claiming to be working class. For all New Labour's rhetoric about aspiration and social mobility, and the brisk high-street trade in chandeliers, it is the postwar babyboomers - not the Blair generation - who have realised the middle-class dream.

However, the other striking feature to emerge from the poll is how consistently bad we are at correctly identifying our own class. The marketing industry's system of socio-economic classification assigns categories according to profession, still considered the most reliable indicator of attitudes and behaviour. Devised by the National Readership Survey, it assigns doctors, barristers and company directors to category A, representing the upper middle class, while B represents middle-class professionals such as teachers or police officers, and C1 the lower middle class - clerical staff, clerks and so on. The skilled working class - Thatcher's famous C2s - are typically tradesmen, while D stands for working-class manual labourers, and E represents casual labourers, state pensioners and the underclass.

Our poll reveals that C2s are the best at correctly identifying their own class, with three quarters claiming working class status - though almost a quarter, 24%, still thought they were middle class. The C1 respondents were divided almost exactly, with 48% claiming to be middle class, and 49% working class - which could be seen as an accurate reflection of borderline status. But among the AB professionals questioned, a full third were under the impression that they were working class - and nearly a third of DEs believed themselves to be middle class. One per cent of C1s, C2s and DEs all thought they were upper class.

Roger Whitmore has been researching class attitudes for Mori for many years, and is very familiar with our confusion. "Fifty years ago there was almost an official and agreed class ranking, and everyone knew where they were located. You knew if you were upper middle working class, say. That has completely gone now. So that whereas once it would have been just straightforwardly objectively wrong for somebody in a middle class profession to think of themselves as working class, that's not necessarily true that it is objectively wrong any more, because these aren't terms that have any agreed meaning any more."

The social commentator Peter York has just published an updated version of The Sloane Rangers Handbook - Cooler, Faster, More Expensive: The Return of the Sloane Ranger - and finds that they too have become increasingly wide of the mark in their class self-appraisal. "They always used to be very shy of using normal handles; in the 80s it was a series of nods and winks. But the convention now is definitely for them to call themselves middle class. Some bolder, older souls will risk saying upper middle class, but almost nobody says upper class any more." Are they genuinely confused, or being deliberately disingenuous? "Oh, I think they know. Yes, definitely."

So we have a curious situation where the vast majority of us - 89% - believe we are judged on our social class, yet fewer and fewer of us can either tell or admit what it is. All three political parties now focus their energy and rhetoric primarily on the interests of the middle class, whose dominance of cultural life keeps growing - yet its actual size, according to our own perception, remains static.

Perhaps the most surprising finding of all emerges from the question concerning the class status of respondents' parents. Less than a quarter of over-65-year-olds said their parents had been middle class, compared with 73% who said they'd been working class. But as you work down through the age groups, the proportion steadily shifts, and among 18- to 24-year-olds we find half saying their parents had been middle class, and only 40% working class. In other words, social mobility among young people today is not rising at all, but actually declining. John Prescott caused quite a commotion in 1996 when he declared himself middle class. But on the evidence of this poll, the old Labour working-class hero is indeed more likely to have made the transition than the shoppers queuing in Argos for brushed chrome retro table lamps.

Visitors to the Geffrye Museum on Thursday afternoon included tourists and Londoners, pensioners and students. Their one thing unifying feature was that they all appeared to me to be middle class. Perhaps the single defining feature of an authentic middle class identity today is an abiding fascination with the signifiers and significance of one's own class status.

Know your place

What do you think of the Turner Prize shortlist exhibition?

(a) Bit weird. They want to get that step sanded down.

(b) A random collection of semiotics that fuse to give us a visceral glimpse of the post-postmodern state.

(c) Terrible pests, bears.

What time is tea-time?

(a) Seven-thirty. Wash your hands!

(b) Four-thirty. Fortnums do a wonderful eggs benedict.

(c) Five minutes after I ring this bell.

You've got the builders in. Do you ...

(a) Have a cup of tea and talk shop.

(b) Float around awkwardly in the background, make useless attempts at conversation, drop your aitches and eventually flee, filled with terrible feelings of self-loathing.

(c) Have a cup of tea and talk shop. Before being dragged upstairs by the arrival of the Earl of Sandwich.

Will you be watching the rugby?

(a) Got to haven't you. The lads have done us proud.

(b) It should be on in the background at the Pestle and Artichoke. Did I mention that I went to school with Andrew Sheridan?

(c) Hazza says there's a spot in the 'copter to Paris - then everyone back to Boujis!

If your answers were ...

Mostly (a): you're not middle class.

Mostly (b): you're middle class. Yes you are. Just get used to it.

Mostly (c): you were unaware that any such thing existed - but it sounds intriguing.